NEW YORK, Dec 11 (Reuters) - U.S. stocks rose on Tuesday,
led by gains in technology companies, helping the S&P 500 end at
its highest level since Election Day.

A 2.2 percent gain to $541.39 in Apple's stock
lifted the Nasdaq, as the largest U.S. company by market value
rebounded from a week in which investors took profits before a
possible tax rise next year. Prior to Tuesday's trading, Apple
shares had lost 25 percent from an all-time intraday high hit in
September.

Stocks pared some gains by late afternoon as more news on
the "fiscal cliff" negotiations emerged. U.S. Senate Majority
Leader Harry Reid said it will be difficult to reach agreement
resolving the cliff tax hikes and spending cuts before
Christmas.

"There's been a real explosion in anxiety over this thing.
Because markets have become the way they are, you've got people
just stepping back," said James Dailey, portfolio manager of
TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.

"There's a tremendous absence of liquidity in the market,"
he said.

The S&P 500 had lost 5.3 percent in the seven sessions
following Election Day as investors refocused on the threat
posed to the economy by the fiscal cliff, a series of automatic
spending cuts and tax increases. Markets have mostly recovered
those losses, but volume has been thin, suggesting investors are
not betting aggressively due to the uncertainty.

The Dow Jones industrial average was up 78.56 points,
or 0.60 percent, at 13,248.44. The Standard & Poor's 500 Index
was up 9.29 points, or 0.65 percent, at 1,427.84. The
Nasdaq Composite Index was up 35.34 points, or 1.18
percent, at 3,022.30.

Other major tech stocks also rose. Texas Instruments
gained 4 percent to $31.01 after bumping up its profit target
late Monday. That helped other chipmakers rally, with the PHLX
Semiconductor index up 1.9 percent. Microsoft
rose 1.4 percent to $27.32.

The lack of demonstrable progress in the fiscal cliff
negotiations has kept investors from making aggressive bets in
recent weeks.

Republican House Speaker John Boehner called on President
Barack Obama to propose a counter-offer on Tuesday.

By contrast, discount retailers Dollar General and
Family Dollar declined. Dollar General said it sees
margins under pressure in 2013.

SPX Corp shares fell 9.1 percent to $62.07 and the
stock was the biggest percentage decliner on the New York Stock
Exchange after sources said the company is in exclusive talks to
buy rival Gardner Denver, in a merger that could create
an industrial machinery conglomerate with a market value over $7
billion.

The U.S. Treasury is selling its remaining stake in insurer
American International Group Inc. AIG's shares were up
5.7 percent at $35.26.

The Fed began a two-day policy-setting meeting on Tuesday.
The central bank is expected to announce a new round of Treasury
bond purchases when the meeting ends on Wednesday to replace its
"Operation Twist" stimulus, which expires at the end of the
year.